All sort of situation pushes people to consider buying life insurance, such as a large debt purchase, getting married, having kids, or starting a business.
Whatever the reason may be, it all boils down to the desire to protect loved ones in the event of a death of the policyholder. If you’re in the market for life insurance or have recently purchased one, make sure that you avoid the following missteps that could jeopardise your family’s finances.
1. Waiting Too Long To Buy Insurance
It’s important to take action and to not drag your feet if you have people in your life that will suffer financially should something happen to you. So, whenever you go through a major life change, sit down and give serious thought to buying some form of life insurance if you don’t already have it, or if you do have some, review it and make sure it will adequately protect your family. Life insurance rates generally increase as you age or your health deteriorates, so the longer you put off the buying decision, the more it will cost you.
2. Picking A Policy-Based Only On Price
Your decision should not be solely based on price. You should consider your needs as well as the needs of the people you want to protect with life insurance. Look for policies that will provide you and your loved ones with benefits, features, and other options that best suite your needs.
Life insurance can be a bit complicated so make sure to ask your insurance agent or broker for help if you need to.
3. Letting Your Policy Lapse Before Its Maturity Date
There are times when letting a life insurance policy lapse may be the right move to make, it’s generally considered undesirable. That’s because doing so puts any related death-claim payments and cash surrender values in jeopardy, among other consequences. So, do what you can to prevent your policy from lapsing without ignoring your other more important investments.
4. Forgetting Insurance Is An Investment
You may look at insurance as a source of protection or security and not as an investment product. A variable life insurance policy provides life insurance protection with cash value, so it’s considered as an investment. So, don’t just let your policy rot in a drawer.
You should regularly check in on it, see how it’s performing, and make changes to it when necessary.
5. Owning All Of The Insurance On Your Life
If you’re the breadwinner and want to secure your family’s financial future, you may take out several life insurance policies and pay its premiums. Though, your survivors may have to jump over a number of annoying tax hurdles upon your passing. So, consider having an adult relative buy, own and be a beneficiary of an insurance policy on your life.